Economic Development Through Entrepreneurship

Economic Development Through Entrepreneurship

Government, University and Business Linkages

New Horizons in Entrepreneurship series

Edited by Scott Shane

Despite a wealth of efforts that examine separately the role entrepreneurs and universities play in economic development, no systematic effort has been made to examine the role universities play in promoting economic development through entrepreneurship. This book fills that gap, focusing on policy aspects of government–university partnerships with a discussion both of best practices and problematic strategies. The book begins by tracing the history of American government–university–industry partnerships that have promoted economic development. In succeeding chapters, well-known scholars focus on linkages in different domains such as: technology transfer, innovation networks, brain drain, cluster-based planning, and manufacturing. Practitioner commentaries follow many of the chapters in order to present an evaluation of the arguments from the perspective of someone directly involved in the fostering of these relationships.

Chapter 3: Creating Innovation Networks Among Manufacturing Firms: How Effective Extension Programs Work

Susan Helper, Marcus Stanley and Daniel Luria

Subjects: business and management, entrepreneurship, economics and finance, industrial organisation

Extract

Susan Helper and Marcus Stanley INTRODUCTION Between its most recent peak employment level in 2000 and 2004, the US manufacturing sector lost over 2.5 million jobs. This represents almost one fifth of its pre-recession total. The question of how to stop this catastrophic employment loss is clearly a critical one, but there are no easy answers. Manufacturers are eligible for a variety of general business subsidies; the vast majority of these are tax abatements for locating or expanding an operation in a particular area (Lynch, 2004). These tax incentives, however, do not increase manufacturing efficiency. The main federal program for increasing the efficiency of manufacturing is the Manufacturing Extension Partnership (MEP). Despite its very low level of funding ($106 million in 2003, or $7 per manufacturing worker), it has been hit hard by budget cuts. Its 2004 appropriation was only $39.6 million.1 There is a lack of consensus on how government could assist manufacturing, or whether such assistance is even really possible. In this chapter, we examine data on a subsector of manufacturing, small and medium-sized (fewer than 500 employees) component manufacturing firms. Component manufacturers typically sell to other firms (rather than to consumers) and thus form a key part of the manufacturing supply chain. We are able to characterize these firms’ strategies in some detail using national data gathered by the Michigan Manufacturing Technology Center’s Performance Benchmarking Service. In the first section of this chapter, we describe the sector and some of the data we used to...

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